Price of Grayscale Ethereum Trust has fallen 65% from its June high

Quick Take

  • The price of Grayscale’s Ethereum Trust (ETHE) dropped dramatically in June
  • Its premium relative to the underlying ETH price also tanked from 948% in early June to 356% 
  • A large amount of ETHE shares are being released in June onto the secondary market after the one year lockup period 

Grayscale Ethereum Trust, a crypto-connected investment vehicle geared toward traditional investors, experienced one of its most drastic price drops since inception this week.

The trust, named ETHE, hit an $82.5 monthly bottom this week, representing a 65% decline from the $239 year-to-date high around June 4. The current share price sits around $98.

Its premium — relative to the spot price of the underlying asset, ETH — plunged from 948% in early June to 356% as of the time of writing.

Source: TradingView

Source: YCharts

The price and premium declines came on the heel of a large amount of ETHE shares becoming available for trading on the secondary market. Grayscale's Ethereum trust fund is structured such that shares are subject to a one-year lockup period before they can be freely traded. 

From May 31 to July 1 of last year, the Ethereum trust's total asset under management surged from $12.69 million to $28.6 million. Given that each ETHE share represents around 0.1 ETH and ETH price during that time rose from $267 to $293, the total number of ETHE shares more than doubled during that month, jumping from around 475,281 shares to 976,109. This means that over 500,000 ETHE shares will be released by the end of June 2020. 

Source: Grayscale

As The Block previously reported, the fact that only a limited amount of ETHE shares could be traded on the secondary market had significantly shored up ETHE's price and premium during the first half of 2020.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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